Last week’s tariff turmoil reinstilled a valuable lesson. Financial advisors who are tempted to avoid their clients when things get rocky like they did last week are missing a significant business development opportunity, a financial advisor coach says.

“I can tell you without a doubt that most advisors right now are hiding from their clients,” said Ermos Erotocritou, who’s been working in the financial services industry in Canada for 25 years and coaching fellow advisors for 20 of them.

“Advisors don’t like having awkward conversations with their clients, and a lot of times, their clients are in portfolios that the advisors themselves have advised them to be in, so they feel somewhat responsible if [a portfolio is] not doing well or if it’s losing money.”

Things have been especially volatile since U.S. President Donald Trump started flip-flopping on global trade policy, causing ripples through markets and panic among investors. Advisors can take charge in these moments and prove their value, industry professionals say.

Communication is key

Educating and preparing clients for market downturns is crucial because it can prevent them from panicking. Some may even see these moments as an opportunity to make more money, Erotocritou said.

“Regardless of whether it’s Trump, whether it’s [Covid-19], whether it’s the 2008 banking crisis, the tech bubble bursting, there’s always something that happens every several years,” he said.

During these events, advisors should call and email their clients to reassure them, remind them of the importance of a long-term investment strategy and suggest taking advantage of market dips to make more money and accelerate retirement plans, Erotocritou recommended.

“Even if they think that their clients are good, lots of times, they’re not good,” he said, noting the No. 1 reason clients leave advisors is due to a lack of contact. “Communication is key.”

Calling is better than emailing, Erotocritou stressed, because it feels more personal.

“I’ll ask you this question: You’re going through a tough time in your life, regardless of [it being about] finances, a breakup, health scare, whatever it is,” he said. “Would you be happy if your best friend sent you an email?”

Moments like these also present an opportunity for advisors to gain new clients, Erotocritou added.

“This is basically what I’m telling my advisors to do right now — reach out to every single one of your prospects, like every single one, because the ones that maybe weren’t interested in talking to you a month ago or six months ago, they’re interested in talking now, because they’re not getting the communication from their advisors,” he said.

Strike a balance

John De Goey, a portfolio manager with Designed Wealth Management in Toronto, has recently been sending out emails on a weekly basis to keep clients informed about what’s going on in the wake of the trade war. In one email, he also shared a link to a podcast episode he released soon after Trump’s so-called Liberation Day, in which he discussed the implications of tariffs with an international trade lawyer.

De Goey said he, too, believes most advisors are currently hiding from clients in light of the market uncertainty. He said advisors should be reaching out — aiming to reassure clients that they’re paying attention without causing unnecessary anxiety.

“You have to calibrate it correctly,” he said. “I think there is such a thing as communicating too much and too little in an environment like this.”

De Goey said he’s one of the rare advisors who encourages their clients to check how their portfolios are performing on a regular basis so they can have peace of mind that they’re holding up no matter what’s happening in the broader markets. This has been one of his strategies over the years to ensure his clients stay invested.

“I basically say, ‘Look, you’ve been worrying for nothing. We anticipated this,’” he said. De Goey moved most of his clients’ money out of traditional assets and into alternative assets in recent years, and they’ve remained relatively steady.

Frustrations abound

Kelly Ho, a certified financial planner and partner with DLD Financial Group in Vancouver, said her firm is similarly trying to keep clients informed and reassured.

“It’s been frustrating, needless to say,” she said.

In light of tariffs and stock market fluctuations, Ho’s firm recently sent out “comfort letters” to clients on two separate occasions, “to put things into perspective and go, ‘Yes, this is unprecedented, but so were a lot of past events that have happened.’ And at the end of the day, there will be things that will happen, and it should not change their long-term trajectory plans.”

An early March letter included a reminder of “all the events that have happened since 1966, outlining reasons why one may want to continue investing and actually showed what happens if one stays invested,” she said.

Generally speaking, Ho said her clients are frustrated with the current U.S. administration rather than “scared” by the market gyrations. “They understand market volatility, that’s not actually the issue. They’re just really frustrated with the fact that this is not a result of a bubbling of a situation that can’t be controlled; this is in the hands of practically a single individual.”

Another reason they’re keeping level-headed, she said, is because they’re aware that their portfolios are diversified and therefore, they’re “not feeling the same type of whiplash.” Younger clients who have a longer runway towards retirement see it as an opportunity to buy low, while those nearing or in retirement are confident their portfolios are sound, Ho added.

Stay calm

Darren Coleman, senior portfolio manager with Portage Wealth of Raymond James Ltd. in Oakville, Ont., said the recent geopolitical and economic uncertainty reminds him of several historical events.

“Most investors have been through something like this five years ago with [Covid-19], right, where there was this incredible external event that felt unprecedented, and nobody quite knew what to make of it,” said Coleman, who runs a cross-border practice.

“I’d say the details today are different, but it feels like the same movie, just with different actors.”

Covid-19 was “wildly unpredictable and markets had lots of volatility,” Coleman said, and the same can be said about Trump. Ultimately, he said what clients look for in these “highly alarming, highly disconcerting” times is for advisors to take on a leadership role.

“You just have to stay calm. You have to demonstrate to the client through your actions that they match your words. So, if you’re telling everybody to remain calm, then you should be calm,” Coleman said.

“Trying to move every time the wind blows in a different direction — boy, oh boy, you’re gonna get really mixed up.”

Ho offered similar advice: “Stay informed and don’t make rash decisions, because if we can’t control ourselves, how can we help our clients?”

NOUSHIN ZIAFATI – advisor.ca
PUBLISHED APRIL 14, 2005